Triple Net Lease: What It Is and Why Investors Love It
When you hear triple net lease, a commercial rental agreement where the tenant pays property taxes, insurance, and maintenance costs in addition to rent. Also known as NNN lease, it’s one of the most common ways businesses rent commercial space — from drugstores to gas stations to banks. Unlike a regular lease where the landlord covers everything, a triple net lease flips the script: the tenant handles the big-ticket items, leaving the owner with near-passive income.
This setup isn’t just convenient — it’s financially powerful. For investors, it means fewer surprises. No sudden $10,000 roof repair bill. No property tax hike eating into profits. The tenant absorbs those costs, so your monthly cash flow stays predictable. That’s why big investors — from pension funds to individual landlords — chase these deals. You’re not just renting space; you’re renting a reliable income stream with minimal effort.
But it’s not magic. A triple net lease only works if the tenant is strong. Think national chains like CVS, Walgreens, or McDonald’s — businesses with long-term leases and solid credit. If you’re looking at a property with a mom-and-pop shop under this lease, dig deeper. Are they profitable? Do they have room to grow? A weak tenant can turn a "hands-off" investment into a headache.
These leases also tie closely to commercial real estate, property used for business purposes like offices, retail, or warehouses. You won’t find triple net leases on apartment buildings — they’re strictly for business spaces. And they’re most common in places with stable demand: suburban shopping centers, highway corridors, medical office parks. Location matters just as much as the lease structure.
And then there’s the tenant responsibilities, the three core costs the tenant covers: property taxes, building insurance, and maintenance. These aren’t optional extras — they’re baked into the rent. A tenant might pay $10 per square foot in base rent, plus $3 for taxes, $1 for insurance, and $2 for upkeep. That’s the triple net. You can’t ignore any of them. If the lease says the tenant pays for roof repairs and they don’t fix it, you’re still on the hook. That’s why reading the fine print — and hiring a lawyer — isn’t optional.
Some investors think triple net leases are only for rich people. Not true. You can buy into them with smaller capital if you team up with others or pick lower-cost markets. A single-tenant retail building in Texas or Ohio might cost less than a two-bedroom condo in a big city — and bring in better returns.
What you’ll find below are real-world examples and breakdowns of how triple net leases play out in practice. From how to spot a good deal, to what happens when a tenant walks away, to why some investors avoid them entirely — these posts cut through the jargon and show you exactly what’s at stake. Whether you’re new to commercial real estate or just wondering if this model makes sense for you, you’ll find clear, no-fluff answers here.
NNN Meaning in Real Estate: Triple Net Lease Explained for Investors
NNN in real estate means triple net lease—a popular way to invest in commercial property with fewer hassles. Learn how it works, its perks and risks, and why investors love NNN leases.
- July 8 2025
- Archer Hollings
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